US Stocks Jump, Buoyed By Home Sales, Weaker Dollar

KristinaPeterson

NEW YORK (MarketWatch) -- U.S. stocks climbed Monday, boosted by a jump in existing home sales and a weekend pledge by global finance officials that calmed fears of a currency war.

The Dow Jones Industrial Average rose 100 points, or 0.9%, to 11232, extending three straight weeks of gains. Entering the month's final week of trading, the Dow is up 4.1% for October, buoyed by hopes that the central bank will take further steps to stimulate the economy at its meeting next week.

Materials and industrials led the Dow on Monday as a weaker dollar boosted companies with more international exports. Alcoa rose 2.4%, while DuPont gained 2.3% and Caterpillar added 1.8%.

Stocks rose and the dollar weakened after a meeting of finance ministers from the Group of 20 industrialized and developing nations, where they vowed to avoid "competitive devaluation" of their currencies while curbing their external imbalances, in a bid to generate more balanced global economic growth. However, the G-20 ministers didn't announce specific targets for achieving their goal of "rebalancing" the world's economy away from an over-reliance on U.S. consumers buying imported goods.

Traders hoping to sidestep a currency war embraced the G20 statement, though some questioned how much of an impact the pledge will have.

"While we're seeing a positive reaction from the market this morning, the real question is when you get back to the individual countries looking at specific circumstances, will they be able to follow through with policies that really are consistent with the spirit of the statement?" asked Jim Baird, partner and chief investment strategist at Plante Moran Financial Advisors.

The U.S. dollar weakened against both the yen and the euro. The euro was trading recently at $1.4006, up from $1.3923 late Friday in New York. The U.S. Dollar Index, which tracks the currency against a basket of six others, fell 0.7%.

In a bright note for the U.S. housing market, existing home sales rose by more than expected in September. Sales of used homes increased by 10.0% to an annual rate of 4.53 million, the National Association of Realtors said Monday. Economists surveyed by Dow Jones Newswires had expected existing home sales to rise by 5.3% to an annual rate of 4.35 million.

Investors looking ahead to the end of the week highlighted Friday's release of a first estimate for third-quarter gross domestic product. Next week's mid-term elections and central bank meeting have preoccupied markets throughout much of the fall. While most expect the Federal Reserve to announce a new round of purchasing Treasurys, or quantitative easing, the scope of any such program is still unclear.

"At this point it would appear QE2 is a foregone conclusion, but how much is necessary and how it will be layered in over the course of time remains a huge question mark," Baird said.

Among stocks in focus, Office Depot jumped 11% after the office-supply retailer announced that its Chairman and Chief Executive Steve Odland will resign in one week. The company also said it will report a surprise third-quarter profit on Wednesday.

U.S.-listed shares of BP edged up 0.1% after the oil giant's new Chief Executive Bob Dudley defended the company's response to the Gulf of Mexico oil spill and reaffirmed that BP won't quit its businesses in the U.S. BP will continue to keep drilling in deep water in the Gulf of Mexico, Dudley said.

CommScope, which makes telecom infrastructure equipment, surged 30% after the company confirmed that it was in talks that could lead private-equity firm Carlyle Group to buy it for $31.50 a share.

Among companies reporting earnings, Boyd Gaming added 3.1% after the gambling firm said it won't exercise its right to match the offer MGM Resorts International received for its 50% stake in the Borgata resort in Atlantic City, N.J., and the company's third-quarter profit fell 11%.

Texas Instruments was up 1.7%, while Amgen gained 0.9%. Both companies report quarterly earnings after the market closes on Monday.

Demand for U.S. Treasurys rose, pushing yield on the 10-year note down to 2.50%. Crude-oil prices rose above $83 a barrel, while gold futures also climbed.

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